Chipping Away at Public Debt: Sources of Failure and Keys to Success in Fiscal Adjustment

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Path-breaking research on one of the most important macroeconomic policy challenges in the post-crisis world, presented in accessible language

Written and researched by a team of experts from the International Monetary Fund, other policy-making institutions, and academia, this timely book looks at fiscal adjustment plans in advanced economies, comparing the planned or projected reductions in debts and deficits to the actual outcomes, and explaining why objectives were met in some cases but missed in others. An overview reveals pitfalls to avoid and lessons learned for securing successful fiscal adjustment.

Written by experts in the field

Addresses public concern about skyrocketing government debts

Contains cutting edge research that changes the way we look at fiscal adjustment

Presents meticulous archival research in compelling and engaging case studies

Explores lessons learned and policy implications going forward

Includes country coverage of all G7 and European Union economies

Educating and informing investors, economists, and the general public, this important book looks at why some attempts to curb debts and deficits succeed whereas others fail, as well as how to ensure successful fiscal adjustment in the period ahead.

Praise for Chipping Away at Public Debt:

"This analytical cross-country study of fiscal adjustment will be highly relevant for several countries, especially those in the euro area that, in the context of the new European governance, will follow a path of public debt reduction in the years ahead."

"Unfortunately, out of necessity, the issues of debt and deficit dominate the national debate in too many countries. The experience of others can often provide a guide to solutions—what to do and what not to do. In this context, this book will prove invaluable."

"Budget consolidation may well be the defining macroeconomic issue for the industrialized world over the next decade. The budget debate is as unbalanced as the budget. Ideology and rhetoric dominate in places where evidence and logic should dominate. This important book balances the debate by providing careful and analytic evidence on all the important tradeoffs. It is a must-read for everyone concerned about our fiscal future."

—Lawrence H. Summers, University Professor at Harvard University; former Director, National Economic Council (2009–2011); Secretary of the U.S. Treasury (1999–2001)

"Reducing public debt will be the main policy issue for the next decade. This volume greatly helps us understand how to do it in a way that achieves the intended objectives despite unexpected events that will inevitably occur. We don't know as much as we should about fiscal policy: this volume improves our understanding with a careful analysis of many international examples of fiscal adjustment. A great read."

—Alberto Alesina, Professor of Political Economy, Harvard University

"How should countries around the world deal with their burgeoning levels of national debt? This timely book's detailed case studies illustrate that though failure is common, there is also more than one path to success and a number of key principles that can serve as a guide to navigation."

—Alan J. Auerbach, Professor of Economics and Law, Director of the Burch Center for Tax Policy and Public Finance, University of California, Berkeley

"There are few questions more important in the U.S. and Europe today than how public debt will be brought under control. Chipping Away at Public Debt reviews a wealth of experience with large-scale fiscal adjustment plans in advanced economies, drawing on country studies as well as statistical analysis. The authors reach useful and sometimes unexpected conclusions. In particular, economic factors such as 'growth surprises' are perhaps even more important than political factors in determining success."

—Dani Rodrik, Professor of International Political Economy, John F. Kennedy School of Government, Harvard University